Maryland’s Public Service Commission (PSC) held a lengthy hearing on Tuesday, to review lessons learned from Baltimore Gas and Electric’s (BGE) 2021-2023 multi-year rate plan. Utilities are in favor of continuing the plan, while various stakeholders argued that it’s time for the state to cut its losses.
In a multi-year plan (MYP), a utility asks regulators for approval to raise rates gradually over several years, instead of implementing a large, one-time increase. Also known as multi-rate plans (MRP), utilities believe they provide financial stability, which in turn helps smooth out rate increases for customers.
BGE filed its first MYP under a pilot program in 2020, launching it in 2021 after receiving PSC approval. The utility argued that gradual increases help it invest in critical infrastructure, including cybersecurity. During the meeting, diverse suppliers testified in favor of the MYP.
“It helps utility contractors like me plan our work,” said Christian Johannsson, chairman of a minority business enterprise.
However, a broad coalition — including consumer advocates, climate groups, policymakers, and a commercial real estate trade association — opposed the MYP’s continuation or called for changes to the process.
David Lapp, an attorney with the Office of People’s Counsel, urged the Commission to oppose the MYP. He argued that it has confused the public.
“MRPs undermine the rate-paying public’s ability to understand what is going on with their rates,” Lapp said. “When BGE filed its second MRP, one of Maryland’s major newspapers had to correct its headline twice, because the proposed rate increases were so difficult to understand. It’s clear that few people outside of those here today truly understand how an MRP works.”
Joyce Lombardi, a policy manager with the Maryland Energy Administration, expressed mixed feelings about the MYP.
“We don’t like multi-year rate plans,” she said. “But we wouldn’t say get rid of them completely. They can align with the state’s climate goals, and they offer some transparency about what utilities are doing and why.”
One crux of the issue is whether the Exelon-owned company was prudent in its spending during the MYP. Earlier this month, the PSC held hearings on BGE’s request to reconcile $152 million for costs it did not foresee. A representative told the four commissioners that the “exogenous” costs were due to new taxes, storms and higher business expenses.
Critics pointed out that this highlights a fundamental flaw in the MYP. They say that if BGE were able to more accurately predict its costs, it wouldn’t need to recover $152 million from consumers. According to Zoe Gallagher, a policy associate with Economic Action Maryland, a recent survey of nearly 500 Marylanders, conducted by the nonprofit, found that more than half of respondents ranked high utility bills among their top five financial burdens.
Additionally, 20% of respondents reported cutting back on utility use to cope with the rising cost of living. “Cutting back on utilities is not a luxury,” Gallagher said. “They are a necessity.”
Though the meeting ended shortly after 4 p.m., commissioners did not render a decision. They are expected to reconvene on Wednesday, October 16 at 11 a.m.
